The Federal Cabinet in Germany has approved plans to introduce an ‘Early Start’ pension, which will see funded retirement accounts opened for children.

Under the share-based retirement savings scheme, children and teenagers aged between six and 17 will be able to begin saving for retirement.

Children aged between six and 17 will receive a monthly state-funded contribution of €10 into a retirement account.

Parents can open individual accounts for their children and add voluntary contributions, while those whose parents do not establish accounts will participate through a state-run collective investment vehicle.

Once the account holder has reached adulthood, the funds will be transferred into the private pension system.

Those who participate through the government-run account can transfer the money into their own account until they reach the age of 35.

The Early Pension will apply retroactively from 1 January 2026, and will include the new cohort of six year olds each year.

Investment returns will be tax-free until the withdrawal phase, which can start no earlier than age 65.

Participants can made additional voluntary contributions of up to €6,840 a year.

“We want everyone to be able to save for retirement better and earlier,” said German Federal Finance Minister and Vice Chancellor, Lars Klingbeil.

“With the early retirement pension, we are giving every child in Germany seed capital for their own retirement savings.

“The government pays a subsidy of €10 per month, automatically and for all children in a given year.

“This allows young people to build up their own assets over the years and learn early on how retirement planning works in the capital market. Today, this depends far too often on one's family background.

“This inequality often continues into old age. We want to change that. The early retirement pension is an important contribution to better retirement provisions and greater equality of opportunity.”

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